Options:
There are two types of Options: Calls and Puts.

The purchaser of a Call option has the right to go long the underlying futures at a predetermined price, on or before a specific date. Buying Call options means that a trader is bullish, speculating that prices will rise. The buyer of a Put option has the right to go short the underlying future at a predetermined price, on or before a specific date. Buying Put options means that a trader is bearish, speculating that prices will fall.

The buying of options is attractive because you have a predetermined amount of risk; the cost of the option, plus commissions and fees. The cost of the option is referred to as premium. When an option is purchased, premium is paid, and all risk is limited to the amount of the premium plus commissions and fees. When an option is sold, premium is received, less commissions and fees, and risk is unlimited. One of the disadvantages is that an option is a wasting asset, limited to a pre-determined expiration date. The wasting asset tends to work against the purchaser, but in favor of the seller.